Further confirmation that UK families are being crippled by the biggest squeeze on their finances since the 1920s has emerged, as a major retailer reported the largest drop in households' monthly disposable income since it started keeping records.

Family spending power slumped by £14 in August, according to the results of supermarket giant Asda's monthly Income Tracker. Rising prices left the average UK family with just £162 of weekly disposable income – 7.9% less than this time last year.

In a separate survey by the retailer, consumers said they were being hammered by increasing costs on all sides, but two in five said a freeze in household energy bills would be the measure that would help them most in the current financial crisis.

Annual inflation (according to the consumer prices index) grew again to 4.5% in August, up from 4.4% in July – outpacing income growth and placing huge pressure on household spending power.

Conditions in the labour market worsened this month and this is likely to continue into 2012 as public sector cuts start to take effect, Asda said.

Family budgets are squeezed further by the rising costs of basics the figures, produced by the Centre for Economics and Business Research (CEBR), show. Rising gas and electricity prices – following announcements from major utility suppliers – have started to feed through into the overall rate of inflation. In August, electricity prices were 5.1% higher than a year ago, while gas prices were up by 8.3%.

Transport costs continue to put pressure on budgets too, with the cost of getting around remaining the biggest factor in the headline rate of CPI inflation. Figures from the AA show the cost of unleaded petrol grew by 16.5% over the year to August while diesel prices increased by 17.4% during the same period.

Asda calculates family spending power as the amount remaining after the average UK household has had taxes subtracted from income and paid for its basic items such as mortgage and utilities, food, drink and transport. It provides a spending power indicator for the average UK household on a monthly basis.

Its separate Pulse of the Nation Survey, carried out on 23 September found four out of five (79%) people believed the government should take action now to put money back into people's hands.

When asked what measures they'd like to see, two in five (39%) called for a freeze on household energy bills.

Andy Clarke, Asda's chief executive, said: "It's clear from this record drop in disposable income that British families have never had it so tough. Our customers are feeling the pinch – they're clear they want more help to help make ends meet."

Charles Davis, managing economist of CEBR, said: "Rising unemployment has added further pressure to household finances in recent months, compounding the squeeze on spending power caused by high inflation and weak earnings growth.

"The Asda Income Tracker shows that family spending power has fallen sharply compared with a year ago. With the UK economy in a particularly precarious state at the moment, things could get worse before they get better. However, inflation should fall back in 2012 and the Bank of England is unlikely to raise interest rates anytime soon given the weakness in the UK economy."